Canadian real estate update


houseWe continue to believe that Canadian real estate prices have reached the top of the cycle as we have cautioned in various articles,

We have seen a continuous uptread since 2001, which is unlikely to last. Buyers should be very cautious at this stage, particularly with investment properties.

Macleans published a great article on this very topic recently, which is well worth reading, see

Canadian Business magazine have also published a story in their most recent issue and it too reflects concerns about the Canadian real estate market. For example, George Athanassakos, a finance professor at the Richard Ivey School of Business, expects a “severe correction,” and soon. Read the article, click here

10 Things You Should Do Before You Retire


Retirement means something different to each of us and is likely different from your parent’s retirement. Peter Laslett (Cambridge Professor) in 1989 published a book called “A Fresh Map of Life”, establishing a new “Third Age” in our lives. This new stage is a block of time in our life before we face health issues, during which we can define our own view of what we aspire to in retirement, focussing on personal self-realization and fulfillment. To get the most out of your “Third Age”, there are things you should do before you reach it.

1 Establish your goals for your retirement.

Having a stated goal or vision for your retirement is the first step in making sure you achieve what you want out of your “Third Age”. You probably have “pent up” demand for certain activities whether sports, travel, family time or engaging in new interests. Maybe you will transition slowly into retirement, through consulting or part-time work. You will need to provide structure to your day, goals to achieve, mental and social engagement. Most of us will be able to shape this third age to our own interests and enjoyments, at-least to some degree.

Discuss with your spouse/partner what each of your goals are and how you would like to spend your time. Maybe one of you is retiring before the other, how will that affect things? Take the time to understand and respect each other’s goals, and find the balance between each other’s desires and any constraints, whether time, interest, health or financial.

2 Medical Benefits

Most Canadians have access to good medical benefits through their employment. Take advantage of these benefits while you are still employed for yourself, your spouse and any dependents on your health plan. Get a complete physical and deal with anything that needs to be addressed while you’ve got the support of the company’s paid medical benefits. Access your company’s EAP (Employee Assistance Program) for any advice you might want; this is one of those underutilized company benefits that you don’t value until you use it. Once you’ve left the employment world, it can be difficult to find the right expert to help you out.

You will need to consider how you want to replace those medical benefits after retirement, both before and after the age 65. ManuLife and SunLife provide an insurance benefit product that mirrors your employment coverage if you sign up within a short period after retiring (usually 60 days). Many professions offer access to medical insurance through their professional organizations. Based on your personal medical history, investigate products for both traditional hospital/drug/dental/eye and also newer services such as physiotherapy, etc. Consider what you may need now and what you may want after the age of 65 to complement public medical coverage.

I’ve been on and off Ambien for about two years. I take a course of this medication every two months. Chronic insomnia doesn’t give me any other choice. Currently, I’m on a 5 mg dose. I take it when I’m already in bed because it works in less than 10 minutes for me. I remember when I first took it and slept on the couch. My advice – take in bed.

3 Company Car vs Personal Car

If you have been fortunate enough to have a company car during your employment, you are going to have to get a new car when you are finished your employment. Sometimes your employer will be willing to sell you the company car for book value or a reduced amount. Consider this option particularly if the car has been well cared for and under your control. Remember though, there is usually a taxable benefit associated to buying a company car at below market value.

4 Other Employment Benefits

You may have other company benefits through your employee. Maybe you have life insurance, disability insurance, or critical care insurance. In most cases these will expire when you retire. If you need them after retirement, it’s usually better to purchase them when you are younger. The time to investigate them is several years before retirement to decide what you want to replace with your own insurance coverage that will continue after retirement. Not everyone needs insurance; consult a trusted professional to figure out what’s right for your situation.

Professional dues and continuing education is frequently covered by your employer. Many professional associations offer reduced annual dues with retirement. If you plan to continue working after retirement in your profession on a part-time basis, you will need to include these costs in your plans.

5 Major/Minor House Repairs

Take an inventory of whatever major or minor house repairs need to be done and get them done before you retire. Maybe the roof is approaching 20 years+; maybe you need to modernize the bathrooms or kitchen, maybe the backyard needs a new deck. Fit these unusual expenditures into your last few years of employment while you still have regular money coming in so that you won’t have any major bills in the first several years of retirement. If there are any expensive surprises, you want to address them before you retire and have options on how to pay for them.

6 Knowledge Transition

If you have been with a company or in a role for many years, maybe even more than 10 years, you’ve got a lot of company history, practices, and accumulated knowledge that has helped make your team and company successful. Share this accumulated knowledge before you retire. Develop a plan with your team and your manager for knowledge transfer. Sharing this knowledge in a structured manner acknowledges your contributions and better equips your team to be successful after you leave. Instead of your retirement being an on/off switch think of it as a gradual transition during which you will prepare yourself for your next life stage, knowing that you are leaving a capable team equipped for success.

7 Update your Wills/Power of Attorney

Many of us prepare our wills and power of attorneys’ once and then forget about them. They should be updated regularly for both changing legal situations and changing personal decisions. If you haven’t updated for your will for 8-10 years, this is the time to have your lawyer review it for anything that needs to be updated.

8 Have a Personal Financial Plan Prepared

An in-depth personal financial plan is the road map that will consider your combined financial assets, government and employment retirement benefits. It will determine the best way to meet your life goals with the resources at your disposal. It can help you value lump-sum payments, deal with stock options or other employment or retirement incentives and determine the most tax efficient investment option. It will identify actions to minimize your tax bill and maximize your government benefits (timing of CPP, minimizing OAS clawbacks, etc). It will help you reduce risks within your portfolio to match your lifestyle needs. It will give you a plan for annual withdrawals from your investment resources to meet your life goals and life span expectations. And it will identify tax efficient estate distribution, whether within the family or to your favorite charity. Have a financial plan prepared by a professional to ensure you get insight into how best to use the resources at your disposal to meet your financial goals in retirement.

9 Practice Financial Discipline

If your financial plan calls for you to reduce your annual expenses after retirement, practice this discipline for a couple of years before you retire. Test your assumptions for reasonability, whether its about the frequency of eating out, reduced clothing bills, etc. Make sure you will have a comfortable lifestyle and the discipline to stick within your budget. Use your last couple years of employment to pay off your mortgage if you haven’t already or to pay off your credit cards every month. Practice financial discipline before you retire so you will be well prepared to live within your budget during retirement.

10 Enjoy Life

Further Reading

There are a significant number of books available on how to plan for your retirement. Some that I have read and can recommend include:

What Color is Your Parachute? For Retirement – John E Nelson & Richard N Bolles

The 7 Most Important Equations for your Retirement – Moshe A. Milevsky

Don’t Just Retire Live It, Love It! A Personal Planning Guide To Enhance Life After Work – Rick Atkinson


Written by Gail Cosman, CA, Senior Wealth Advisor, Tridelta Financial

Key Indicators of the Global Financial Markets


The TriDelta Investment Process

In addition to the bottom up analysis of Fixed Income and Equity investments, our investment committee also conducts a detailed monthly review of macro factors that affect the global financial markets.

This top down analysis involves reviewing several types of fundamental, economic, technical and geo-political market data.

When looking at the fundamentals of each market or region we are essentially trying to see what value is currently being attributed by the market and what returns are expected. For the global equity markets we review the price to earnings ratios and other valuation measures to assess the value of each market relative to one another and historical ranges.

Country or region’s valuations are then compared and contrasted with historic and estimated earnings growth trends, any revisions and gross domestic product. This review provides insight on markets attractiveness – over, under or fairly valued and growth expectations relative to history.

Key Indicators

Our analysis of the geo-political situation around the globe is another key element that influences portfolio decisions. Economic growth is typically associated with political climate and so too, market activity. A recent example is France where on May 6, 2012, François Hollande became the first Socialist to be elected president of France since 1995. This swift and somewhat surprising outcome has many economic ramifications, not least of which is that it will be seen as a challenge to the German-dominated policy of economic austerity in the euro zone, which is suffering from recession and record unemployment.

Technical factors are another indicator that our investment committee reviews. This analysis focuses on sentiment and trends. Sentiment indicators provide useful clues such as market bottoms in an oversold market. Interestingly many of these such as the ‘Bull/Bear’ indicator are contrary indicators and . When readings are at an extreme people are excessively optimistic or pessimistic and the markets are usually ready for a change in direction. These events usually happen once or twice a year and are usually the most opportunistic times to make strategic changes to a portfolio.

Analysis and review of current economic data is performed to determine a variety of aspects including where certain countries are in their economic cycle and cyclical opportunities. Numerous government statistics such as jobs data, consumer price index (CPI), capacity utilization, gross domestic product (GDP) and housing data help us determine the state and direction of the economy.

We review the shape of the yield curve and changes to credit spreads as part of our fixed income analysis. This in depth monthly review reveals shifting yields for various maturities, which enables us to gauge income expectations and the level of risk investors are willing take in order to generate extra yield. We look for the ‘sweet spot’ and adjust the portfolio accordingly although shifts are seldom monthly, but rather evolve over many months.

Collective Wisdom

All of these indicators provide clues and collective wisdom that influences our investment decisions. Things such as sector allocation in equities to credit considerations in fixed income.

None of us have a crystal ball, but just as the saying, “the more I practice, the luckier I get” goes, so too do we find that the more research and application of collective experience, the better our performance.

TriDelta’s strict adherence to a disciplined approach and risk management shifts the odds into our client’s favor, which in turn provides the peace of mind we promise.

This article was written by Cameron Winser, VP of Equities, TriDelta Financial Partners. Click here to learn more about TriDelta Financial’s investment strategy or contact us with any questions about our financial planning services.

4 Challenges to Planning Your Parent’s Retirement


Are you a baby boomer? Have you had the conversation with your parents? Now is the time to plan their retirement (image/istock)

The Baby Boomers are doing some serious retirement planning these days.

Just one problem. They forgot to plan for their parents.

They may be 55, but their parents now need their children more than ever before.

I have many clients that have at least one parent with Alzheimer’s disease — often in their 80s or 90s. The Boomers face many social, physical and mental challenges with their parents. These can be very difficult on their own.

In addition, there are several financial challenges that arise that must be faced and in every case, intergenerational or cross-family financial discussions are the key to a positive outcome. Here are four challenges to deal with and possible solutions:

1. We saved for our retirement, but didn’t plan on paying for everyone else’s as well.

Every retirement planning discussion should include the following question: “Are your parents and in-laws likely to be a financial burden, fairly independent, or are you expecting a meaningful inheritance?”

While many people have a hunch about it, they really need to have a better handle on it, as it is key to their own retirement plans. In my firm, we recommend that, if possible, they have a conversation with their parents that starts with: “We are doing some personal retirement planning, and we were asked a question about our parents. We don’t need to get into huge detail, but we wanted to have a discussion about whether we might need to provide some financial support to you or whether we thought there would be a meaningful inheritance. (Wait for laughter to stop.)”

It is possible that this question will have a pretty short response and won’t go further, but in most cases it does open the door to a more complete discussion.

2. Why are we responsible for Mom and Dad? What about your brothers?

Sometimes life isn’t fair. There is always someone who shoulders  more of the load. It doesn’t stop just because Mom is getting old and needs support.

Support for older parents is both in terms of time and energy, and also can be in terms of money.

In many cases, women in particular have to retire early and give up an income to look after parents. This in itself could affect their retirement plan. Should they be entitled to get paid by the parents? Should they get a larger inheritance?

In an ideal world, the child that provides most of the caregiving is not in need of any compensation, and the parents can pay for any needs that arise.

In the real world, sometimes there does need to be some financial compensation for all of the time that one child puts in. With siblings, you will likely never get full agreement on these arrangements. It is usually something that should be co-ordinated between the caregiver child and the parent, and other siblings should be notified of the facts. It isn’t a vote.

3. We should have had the insurance discussion sooner.

If you are 45 years old, do you know what insurance coverage your parents have? Do they have critical-illness insurance, long-term care insurance, individual life insurance, joint first-to-die, joint last-to-die life insurance? Did their insurance coverage expire at 65 or 75?

The reality is that this is your business. All of these insurance policies, other than joint last to die, will have an impact on your parents’ financial well-being. They may mean the difference between them being able to look after themselves financially or require your financial support.

This conversation is also a good eye-opener for the 45-year-old — and it may raise some opportunities.

Opportunity No. 1: It may be too late for your parents to be properly set up due to health issues, but now is the time that you should be ensuring that living benefits like critical-illness insurance, in particular, is explored.

Opportunity No. 2: If one of your parents is in reasonably good health — even if they are 75 years old — taking out a life insurance policy on a parent may be an important part of your retirement plan. I know this may not seem right at first glance, but if the 45-year-old is going to have to look after the parents financially, it can impair his personal retirement plan. If his insured parent dies in 20 years, the son will receive a tax-free insurance payout at age 65 — a perfect time from a retirement perspective. In many cases, the return on investment of this type of insurance policy can be 7%+ on an after-tax basis.

4. Do Mom and Dad have powers of attorney in place? What about their will?

Once again, what might not be considered your business can quickly become your most important business. They should have a power of attorney over personal care. This provides guidance on who can make medical decisions on the patient’s behalf, if he is unable to make his own decisions. It usually deals with items like whether you want doctors to make ‘heroic efforts’ to save your life, or not.

I started taking Ambien five days ago and was ready for morning drowsiness. To my big surprise, my expectations didn’t come out. I felt absolutely fine. By now, I don’t feel any side effects. I no longer have trouble falling asleep, and it’s a real miracle to me. The best sleeping pills I’ve ever taken, for sure.

There should also be a power of attorney over property. This gives someone the ability to sign documents on another person’s behalf. Without it, many necessary financial transactions and decisions will happen at a snail’s pace.

As for their will, do you know where to find it? Has it been looked at in the past 20 years? Are the executors of the will up to date? Have the named executors died 10 years ago? These issues could become a nightmare for the survivors if they aren’t reviewed and clarified.

I believe the most important issue here is opening up the lines of communication with older parents. It is important to position the conversation in terms of your own personal planning, and addressing questions that you need to answer to complete your plan.

As the Baby Boomer children, you need to have these conversations with your parents. It will benefit everyone in the long run — and there is no day better than today.

This article was originally published in National Post. You can follow him on Twitter for more financial advice.

Click here to download our 2012 Retirement Income Guide

Ted Rechtshaffen
Written By:
Ted Rechtshaffen, MBA, CFP
President and CEO
(416) 733-3292 x 221

Give More, Spend Less: The Strategy for a Financial Donation


major-charity-contribution-giftThis is a story about a couple that wanted to make better use of their hard earned money by leaving a significant legacy to the Alzheimers Society. They came to us for advice on how to execute their charitable contribution strategy, so we devised a plan. Let’s call them Joe and Susan.

As the retirement phase approached, Joe and Susan had some concerns to consider. They traveled frequently and wanted to maintain their lifestyle in retirement without fear of running out of money. At the same time, they wanted to pay as little tax as possible and help advance Alzheimer’s research to rid the world of this cruel disease.

We told them:

  • They have lots of financial flexibility to travel.
  • They will not outlive their money, but would likely have a $2 million Estate and a lifetime tax bill of $530k.
  • The $530k in taxes can be cut significantly with proper planning.
  • A good part of the tax savings can go towards charitable causes like the Alzheimer’s Society with the right strategy.
  • They can even afford to retire earlier, and potentially spend more time volunteering.

The strategy:

Joe & Susan already contributed $5,000 a year to charity, but after learning how efficient we could structure their situation, they felt they could afford to give more, and wanted to. We showed how they could substantially increase donations without it costing them much more than they had already been contributing. The Alzheimer’s Society would benefit greatly from this decision.

What we did:

  1. We set up a joint insurance policy that will pay out when they both pass away.
  2. Fund the policy with $11,000/year for 20 years. After 20 years, the policy will be fully paid for and their favourite charity will be the beneficiary of the policy.
  3. Because of the structure, Joe and Susan will receive a full donation tax credit every year of $4,400, so their net cost is just under $6,600 a year.
  4. As a result, the charity will receive a $1 million benefit!
  5. Essentially, Joe and Susan put $6,600/year in for 20 years, a total of $132,000, and the total benefit to their favourite charity will be $1 million.
  6. If Joe and Susan live to full life expectancy, the AFTER TAX rate of return on this charitable investment will be over 10%, guaranteed. There is not likely a better investment return available – especially given the low level of risk.

Joe and Susan can still give roughly $9,000 a year to charity – either through cash or stock – and help make a more immediate impact. You don’t need to donate $11,000 for this to work for you. The strategy is scalable and can be structured to match your particular situation.

To get a quick sense of your financial possibilities and what you can afford to give, use our free online calculator. Be sure to connect with us on Facebook or Twitter. This article was written by Brad Mol, Senior Financial Planner

5 Investment Scams You Must Avoid


That salesman may seem nice but take some precautions before signing away your savings (Thinkstock/Getty Images)

Bernie Madoff got our attention. We wondered: could it happen to us?

The reality is that these scams are as old as time, and are going on right now. There are also ways to avoid them. Here’s how:

“We truly, truly believed this man.”

This was a quote from a recent victim of a 38-year-old real estate entrepreneur from Oakville, Ontario. Trusting someone takes time and is an important thing. The problem is that all victims seem to say the same thing. If someone seems honest and respected in the community, they probably are. However, don’t invest your money based on that. It has cost people billions of dollars. There needs to be something much more tangible beyond personal trust.

“The rates of return are so good.”

One of my clients made a comment about the GIC rates at Stanford International Bank in Antigua. They wondered if they should put some of their safe money there because they could get 5% and 6% rates on short-term GICs. The questions that need to be answered fully are always, ‘why such a good return? What is the investment in? What is so special about how the underlying investment is to achieve this extra return?’  If you keep asking questions and get clear answers, then it might very well be a good investment. The problem is if you are not in a position to know what questions to ask, it can be difficult to discern between a real investment and a not-so-real one. The other obvious sign to run is when you ask questions about the investment or its structure and you don’t really get straight answers.

“Can I see the value of my investments?”

This is another warning sign. In most Ponzi schemes, the value shown on a statement was a made-up number. The value behind the number was not entirely clear. Anytime you invest in something that isn’t publicly traded or held at a large financial institution, you are taking greater risk.

For example, if you own 100 shares of Royal Bank according to your custodian at TD Bank Financial Group, you can be pretty certain you actually own 100 shares of Royal Bank. You can then look on the public and open stock market and see the value of those 100 shares. If you have money in Stanford Bank (even though it was very large) in Antigua, you will get a statement showing a balance of dollars. You had better be confident in the banking regulator in Antigua that they have a strong enough system to ensure those dollars are actually there.

“First I put in $20,000. It did well, so I put in $50,000. It did well, so I put in $250,000.”

Humans are greedy by nature and it’s tough to overcome. When something appears to perform well, it is natural to want to have more money invested in it. If the investment is growing on paper, how certain are you that it represents a real number? The toughest scenario is when you put money in and take it out before making further investments. It is then real cash. It instills confidence. It builds trust. This is why Ponzi schemes are so successful. Unless there is a run on the money, as long as new money is going in, most investors can get their funds out. Don’t be fooled by an initial good investment by betting the farm.

“I trusted my gut feelings that this was a good investment.”

Don’t trust your gut. Trust your brain and do your homework. Your life savings are too important to risk on “liking the guy” or “they seemed honest.”At the end of the day, investment is always a balance of risk and reward. Always understand the true risks you are taking. If the cheque is written out to a small entity or person — please do a triple check before handing the money over. The next Ponzi scheme is being set up right now.

Do you have an additional tip for avoiding a scam? Leave a comment below or message us on Twitter or Facebook!

Ted Rechtshaffen is president and CEO of TriDelta Financial, a firm that provides independent financial planning and investment advice. This article was originally published in National Post.